Problema Solution
After analyzing your menu, you find that food sales are $1,200 and beverage sales are $800. Your average gross margin for food and beverage is 67%. Which is more profitable, food or beverage?
Answer provided by our tutors
Average gross margin ratio = Gross profit / Net sales
Gross profit = Average gross margin ratio * Net sales
Average gross margin = 67%
Food gross profit = 0.67 * 1200
Food gross profit = $804
Beverage gross profit = 0.67 * 800
Beverage gross profit = $536
Since 804 > 536 follows food is more profitable.